How to Navigate the Stock Market

Posted by Varun Chauhan on March 19th, 2021

It is natural to be overwhelmed by the amount of advice, and strategies offered. This makes it almost to make a decision. The following steps will help a beginner to make smart decisions while investing in the stock market.

Income vs. Growth: The primary key to successful navigation of the stock market is to understand the difference between growth and income funds. Practically, all the stocks in the market fall under these two categories. However, growth stocks are stocks with high return potential. The value of these stocks may grow manifold in the next few days or months. On the other hand, income stocks do not provide this kind of profit. The attractive point of income stocks is the dividend yield they pay to the shareholders.

Technical Analysis vs. Fundamentals: The second key to successful investing is to understand how fundamentals and technical analysis affect your investment decisions. Fundamentals tell us about the aspects of the business that can determine failure or success. They also tell us about products, services, management, the scale of operations, etc. Technical analysis on the other hand tells us about how the stock is going to reach in the future. It includes moving averages, RSI index, etc. The success of beginners in the stock market rides on these two things heavily.

Timing vs. Time: It is the third most important key to success for beginners. Though both sound similar, they are not. Timing is the ability to predict the direction of the market. The idea is to buy at the lowest value and sell at the highest. Even the most experienced traders have a hit ratio of 30-40 percent. A beginner should not try to predict this. He or she will be burned badly. Time on the contrary tells you to be patient before taking a significant position in the market.

Now you can still choose to invest by yourself. However, if you are not sure about it, you can always take the help of professionals. The managers are always watching the stock market live. Hence, they are in a better position to take a call. Again it is your choice whether to go with this option or not. But should you choose to invest by yourself, always be prepared to lose a good amount of money.